The Natural Drink Company Has Developed a Regression Model Relating

question 14

Essay

The Natural Drink Company has developed a regression model relating its sales (y in $10,000s) with four independent variables. The four independent variables are price per unit (PRICE, in dollars), competitor's price (COMPRICE, in dollars), advertising (ADV, in $1,000s) and type of container used (CONTAIN; 1 = Cans and 0 = Bottles). Part of the regression results is shown below. (Assume n = 25)

a.If the manufacturer uses can containers, his price is $1.25, advertising $200,000, and his competitor's price is $1.50, what is your estimate of his sales? Give your answer in dollars.
b.Test to see if there is a significant relationship between sales and unit price. Let  = 0.05.
c.Test to see if there is a significant relationship between sales and advertising. Let  = 0.05.
d.Is the type of container a significant variable? Let  = 0.05.
e.Test to see if there is a significant relationship between sales and competitor's price. Let  = 0.05.

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Definitions:

Exponential Random Variable

A type of random variable that represents the time between events in a Poisson point process, characterized by a constant mean rate.

Mean

The average of a set of numbers, calculated by dividing the sum of these numbers by the count of numbers in the set.

Standard Deviation

A tool for assessing the scope of variation or dispersion among a series of figures.

Exponentially Distributed

Describes the time between events in a process in which events occur continuously and independently at a constant average rate.